At video on HotAir, Geithner is asked if we should get rid of the debt ceiling.
Interviewer: Do you agree with Alan Greenspan that we ought to just eliminate the debt ceiling?
Geithner: Oh absolutely.
Tim Geithner can’t pay his own taxes, so there’s zero reason he should’ve been Treasury Secretary to begin with, but that’s just another in the long string of Obama appointments that are glossed over entirely by the media. Just a reminder, though.
ZeroHedge asks what Geithner will do now, as it seems he’s leaving the Obama administration, and briefly recaps his past, which also ties in with his statement above:
Tim Geithner’s public “servant” tenure has not been without its blemishes: from his deplorable run as the (figure)head of the New York Fed (from 2003 until 2009), when the entire financial system literally imploded under his watch, to his epic failing up as Hank Paulson’s replacement as treasury Secretary of the United States, despite his legendary inability to navigate the Minotaurian labyrinth that is the TurboTax income tax flowchart, the Dartmouth alum has had his share of run ins with adversity (and adversity won). Of course, Geithner’s tenure in charge of the Treasury in the past 4 years has been somewhat mollified by the fact that here too here was merely a figurehead, and the true entity that runs the US printing presses is none other than the JPM and Goldman Sachs co-chaired Treasury Borrowing Advisory Committee (for more on the TBAC read here and especially here as pertains to the former LTCM trader and current head of JPM’s CIO group), meaning that the US Treasury, just like the Fed, are merely branches of the one true power in US governance: Wall Street. Geithnerian figureheadedness aside, the one undeniable fact is that Tim Geithner’s days as head of the Treasury are now numbered: he has made it quite clear that he will not accompany Obama (should the incumbent be reelected) into his second term. So what is a career “public servant” to do once the public no longer has any interest in retaining his services? Bloomberg’s Deborah Solomon has some suggestions…
First, it may come as a surprise to some, that just like virtually every other central planner currently in charge of deciding the fate of billions of people in US and around the world, Geithner has never really had much interaction with real life:
Despite the fact that much of the public — not to mention some lawmakers on Capitol Hill — assume Geithner worked on Wall Street, he never has. Instead, he has spent most of his career in public service. Before taking the Treasury post in 2009, Geithner headed the Federal Reserve Bank of New York for six years and worked at the International Monetary Fund. His main private-sector job was at Kissinger Associates Inc.
The years in public service — particularly engaging in diplomacy with domestic and foreign partners — left a deep impression on Geithner, infusing him with a sense of purpose that he might find lacking on Wall Street (see: “Why I Left Goldman Sachs” by Greg Smith).
This by itself isn’t to much of a surprise, but consider what the debt ceiling is. It’s an artificial limit set by congress that says “we’re not spending money we don’t have past this mark”. It’s a way (though not a great way) to somewhat reign in spending by government.
Tim Geithner, who can’t figure out how to pay his own taxes, has been a Treasury Secretary who’s functionally done nothing but print more money. His plan to deal with the economy and government debt has been Quantitative Easing 1, 2, and now Ad Infinitum. Of course he’d want to eliminate the debt ceiling. Then the government can just spend spend spend into oblivion without even a hint of restraint. Besides, Geithner is part of the powerful elite ruling class, and he won’t be living a life impacted by his own decisions, whether he leaves as Treasury Secretary or stays on.
Remember this condemnation from the Chicoms, from last year?
SHANGHAI — China, the largest foreign holder of United States debt, said Saturday that Washington needed to “cure its addiction to debts” and “live within its means,” just hours after the rating agency Standard & Poor’s downgraded America’s long-term debt.
“The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” read the commentary, which was published in Chinese newspapers.
When the govt. is printing bonds and TIPS and everything else to sell to the Federal Reserve and all the mess that is Quantitative Easing, and especially if the debt ceiling is removed, at best, all this becomes is a longer game of kicking the can down the road, assuming someone wants to solve the problem.
The downright scary part is what FerFal wrote about in Argentina:
As for the rest of the population, nothing has ever worked as well for the peronist party as keeping those families poor and numerous, and the Ks repeat that same recipe. The handouts for one reason or another make sure those votes keep coming. Handouts per child, for political support, its all there if you show up to the rallies or protest against the companies that aren’t “team players” with the government. If you are a company owner, in the legal or illegal pharmaceutical business, a good amount of donations will go a long way in ensuring the health of your business. We’re (sic) does the money come from? Stealing the retirement funds helped, so does sucking the blood out of what’s left of the middle class through taxes…
What if they really don’t want to solve the problem? What if they just want to destroy everything? Fundamental transformation? The super-rich Democrats have for the last few decades managed to paint themselves as a party that cares about the poor through giving handouts, and they’ve done well politically with it. There are entire regions in cities that vote exclusively for Democrats, and mostly because they’re areas that are clearly politically defined as handout-recipients and usually along ethnic lines. Thomas Sowell has written extensively on how the Democrat party has abused the urban black community into poverty and squalor and convinced them that the Democrats will save them, a disturbing mass Munchausen by proxy. Democrats by their Alinsky playbook mean to go out, create a crisis, and “solve” it; they never let a good crisis go to waste, and instituting a crisis in order to further their own political goals is something that has been done many times before.
And while there are some in the party who do want that, there are others, like Geithner, who are probably just ignoramuses, or insulated “geniuses” convinced of their own superior intellect who don’t understand that spending money you don’t have doesn’t work forever. Isolating purely the economic side of it and ignoring the political power grabs that are coming from it, you simply cannot kick the can down the road forever.
Apparently there’s a nice term for when this ends, now. A Keynesian Endpoint.
Keynesian endpoint is a phrase coined by PIMCO’s Anthony Crescenzi in an email note to clients in June 2010 to describe the point where governments can no longer stimulate and rescue their economies through increased government spending due to endemic levels of pre-existing government debt.
“Time, devaluations, and debt restructurings might be the only way out for many nations,” Crescenzi wrote in an e-mailed note titled “Keynesian Endpoint” that referenced the Great Depression era economist John Maynard Keynes. Debt-fueled spending programs aimed at combating the global financial crisis of 2008 are among policy tools now “being seen as a magic elixir that has morphed into poison.”
Margaret Thatcher summed it up well years ago:
Of course, while the financial system may fail on this, there are a lot of scapegoats to go kill and enemies to destroy, and a lot more people to blame. The Democrats are already gearing up to blame the Republicans for the fiscal cliff – it benefits them to go over the cliff and hurt the country so they can blame Republicans.